Samsung Expects 1Q2013 Earnings Of $7.7B, Up 53% Thanks To Smartphone Sales

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Samsung said that it expects to post first quarter operating profit of about 8.7 trillion won ($7.7 billion USD), up 53 percent from the 5.7 trillion won operating profit it earned a year earlier. The South Korean tech giant also said that its sales likely rose to between 51 trillion won and 53 trillion won from 45.3 trillion won a year earlier.

Sales of its more than 30 smartphones models helped increase shipments to a record high in the first quarter despite the post-holiday shopping slump that hit rival Apple. Five analysts cited by Reuters said that Samsung likely shipped 68 million to 70 million smartphones, up from 63 million in the fourth quarter of 2012. In comparison, iPhone shipments likely fell 30 percent to the 30 million range from 47.8 million in the fourth quarter, the analysts said.

Earnings have grown on sales of the Galaxy S and Note series, but analyst Lee Sun-tae of NH Investment & Securities told Reuters that Samsung will probably begin to rely increasingly on mid-tier handsets like the Rex and Galaxy Pop in order to keep momentum going in sales as competition in the high-end market ramps up. The lower-priced phones will also help the company, which currently manufactures more than 30 smartphone models, compete in emerging markets.

“The first quarter will be the bottom of its earnings cycle for this year, and things will only get better from here as it rolls out new mobile products,” said Lee.

Samsung has already enjoyed record breaking profits for five quarters in a row, but 42 analysts surveyed by Reuters said that the Galaxy S4, which will be released later this month, may boost earnings in this quarter up to an all-time high of 9.7 trillion won.

On the other hand, some analysts say the rising production cost of higher-end devices may chip into Samsung’s margins.

The Galaxy S4’s new features “could potentially put pressures on their overall smartphone margins. The big cost drivers are the improved HD resolution AMOLED touchscreen, quad-core applications processor and memory,” IHS iSuppli senior analyst Wayne Lam told the Wall Street Journal.